Gold logs losses for the day, week and month

‘Cliff’ woes dominate trade, will continue to next week, says analyst

SarahTurner

SAN FRANCISCO (MarketWatch) — Gold futures dropped nearly $17 an ounce Friday to suffer declines for the week and the month as Washington negotiations aimed at resolving the so-called fiscal cliff continued to influence investor sentiment.

The “gold market is concerned there will not be a solution” to the fiscal cliff, said Jason Rotman, president of Lido Isle Advisors, a Newport Beach, Calif.-based alternative-investment firm. “We believe the dollar will rally as the S&P 500 potentially goes down if the fiscal cliff causes another recession, and this environment would likely be bearish for gold.”

Week ahead: Cliff talks continue

Gold for February delivery
US:GCG3
fell $16.80, or 1%, to settle at $1,712.70 an ounce on the Comex division of the New York Mercantile Exchange.

For the week, the February contract lost 2.3%, and was 0.5% lower for the month.

Compared to the settlement prices for the December contract, which was the most active at the time, futures prices lost 2.2% for the week and fell 0.4% for the month.

“The next episode of the ‘fiscal cliff’ drama was [...] Republicans rejecting the plan of the Democrats,” said Julian Phillips, founder and writer at GoldForecaster.com. “This sets the stage for the gloves to come off for both sides.”

Gold prices gained 0.6% Thursday as investors focused on the talks to avert the large-scale U.S. spending cuts and tax hikes known as the fiscal cliff.

Reuters

House Speaker John Boehner, calling Thursday for Democrats to “get serious.”

House Speaker John Boehner on Friday said there is a stalemate between Republicans and President Barack Obama’s administration. He also said Obama’s proposal of $1.6 trillion in new tax revenue and less than $400 billion in spending cuts was not “serious.” See: There is a ’stalemate’ on debt talks, says Boehner.

“We raise an eyebrow at talk of an early settlement of the issue well before year’s end,” Phillips said in a note. “We expect the political game to be played to the full. All markets including gold and silver will be made volatile as each chapter is read to the public and digested for them.”

View for next week

“While the Republicans appear to be flexible on tax increases, the administration has shown no inclination to put any real spending cuts on the table,” he said.

“I do not think the market or public believes the promise of future spending cuts will ever materialize. The end result will probably be continued stagnant growth in a higher tax environment, and the Fed will be forced to continue easy monetary policies indefinitely,” said Wright. That’s “good for gold.”

For now, most other major Comex metals ended lower, with silver leading the way.

March silver
US:SIH3
fell $1.15, or 3.4%, to settle at $33.28 an ounce. Based on the most-active contract settlements, futures prices fell 2.5% for the week, but tacked on 3% for the month.

March palladium
US:PAH3
rose 75 cents, or 0.1%, to end at $688.20 an ounce. Prices gained 3.1% for the week and added 13% for the month.

January platinum futures
US:PLF3
fell $14.90, or 0.9%, to $1,604.60 an ounce. Prices were down 0.8% for the week, though up around 1.7% for the month.

March copper futures
US:HGH3
rose 4.5 cents, or 1.2%, to settle at $3.65 a pound, bucking Friday’s bearish trend. Prices scored weekly and monthly gains of more than 3%.

U.S. data released Friday showed consumers cut their spending for the first time in five months, with October’s spending falling to a seasonally adjusted 0.2%, a reversal following a 0.8% surge in September. See: U.S. consumer spending drops in October.

The Chicago PMI, meanwhile, inched into expansion territory in November, rising to 50.4 from 49.9 in October, though the latest figure came in just below the 50.5 forecast of economists polled by MarketWatch. See: Chicago PMI inches into expansion territory.

Over in India, the world’s largest gold consumer, economic growth expanded 5.3% in the fiscal second quarter from the year-earlier period. That represents a slowdown from the 5.5% year-on-year expansion recorded in the April-to-June period. See: India GDP rises 5.3% on-year in July-Sept. quarter.

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